Small Business Insurance And Why You Need It

Just like insurance for your home or car, small business insurance is one of those things that you know you need to have, but hope you never have to use it. For a small business especially, having insurance can mean the difference between staying in business or losing your business altogether.

Unlike home insurance, however, there are two main types of insurance required for businesses, regardless of size. Depending on your business needs and size, there are also more specialized types that are available, so you need to make sure you've got the right business insurance for your requirements. The two main types of insurance you need for your business are Property and Liability.

Property Insurance
Simply put, property insurance will cover everything that your business owns as far as assets go. So, if you own your building, that will be covered; it also includes any equipment you own as well as any damage or destruction that might happen from a break-in or similar.

Contents insurance can normally be incorporated with property insurance, and will cover your business assets. However, if you work from home, normal home insurance won't cover you, so make sure you find out about Home-Based Business Insurance.

Liability Insurance
This is quite possibly the most important insurance your business can have, as it will protect you from any lawsuits from unhappy clients or suppliers. This can be split down into three categories:

- General Liability Insurance. If you have employees and they have an accident at your workplace, this will cover any injury caused to them. It will also protect you if a customer has bought one of your products, or uses a service you provide, and is injured as a result. By covering the legal expenses involved in a lawsuit, general liability insurance can be a lifesaver for any small business.

- Product Liability. This covers both manufactured and assembled goods specifically, so you should have this if you're in the manufacturing or assembly industry.

- Professional Liability Insurance. This is aimed more at professions such as a doctor, lawyer, computer consultancy companies, etc. Offering protection against the likes of malpractice suits and the results of erroneous services and advice, this is often a mandatory insurance for certain professionals.

Other Insurance Types
Business Interruption Insurance is an excellent cover that will ensure any revenue that you lose is covered if you have to close your business for a certain period of time. This normally happens from flood or fire damage.

Depending where your company is based, there may be certain other types of insurance required, especially for small businesses. For example, Canada requires Workers Compensation Insurance if your business has employees, while Employee Insurance can offer such benefits as healthcare and disability cover. Companies with employee insurance tend to have less turnover of staff, since they feel that they're working for a company that cares for their needs.

Although you may feel that you don't need all the insurance that is available for businesses, and that is your decision, you should consider the effect on your company if you don't have them. Defending against a lawsuit could potentially cost millions, and having to replace unhappy staff is costly as well. For the extra cost of relevant business insurance, you can ensure a more profitable company.